Insights in costing of continuous broadband internet on trains to allow delivering value via services

Abstract

Continuous broadband Internet on trains is at the moment being deployed worldwide but not always profitable. Solely providing internet for travellers will have a negative return on investment. But, different service providers could be interested to share the unused capacity of resources deployed to offer other services. In this way, resources and their costs are shared over several services and revenues may rise above the total cost. Service operators should therefore be able to make well informed decisions based on an ex-ante estimate of the cost of a service. Using activity based costing (ABC), we investigate on the one hand how to determine the total cost of resources supplied and on the other how to estimate the cost of consumed resources of a service. Our results show that ABC can adequately cope with the case specific nature of the rollout of services on a train. ABC provides insights in the contributors to the cost per service and the unused capacity. Moreover, obtained results can be used to distribute the cost based on the usage of resources, activities and services, evaluate the service mix and identify candidates for outsourcing. Still, ABC does not give insight in how the unused capacity of a resource should be allocated. The optimal allocation of unused capacity will therefore remain the focus of future work.